Bad news is generally good news for the media. At times of crisis, newspaper sales rise and more viewers tune in to television bulletins in search of information. Few stories are as dramatic, or as complicated, as the global credit crunch, which has bought the world's financial system to its knees, although this time, newspapers have not seen their year on year circulations increase. Figures released by the Audit Bureau of Circulations on Friday showed that sales of many 'quality' titles recorded monthly rises in September, but falls compared with the same month last year.

Without the turmoil in the financial markets, however, those figures might have been far worse. The credit crunch has elevated financial news to the front pages, and turned the BBC's Robert Peston, a former Financial Times reporter, into a household name, prompting the Daily Mail to ask last week: 'Does this BBC man have too much power?'

That probably tells us as much about journalistic envy as it does about Peston's influence, but it also demonstrates that City journalists are unique in one respect: the stories they write can move markets in a way that others rarely do. When he has referred to individual banks, Peston has been careful to stress that savers are unlikely to lose their money, and others have exercised similar restraint as the crisis has unfolded. The FT changed a front-page reference to 'the world in fear' to 'the world in turmoil' last week, as executives at the paper tried to communicate the momentous nature of the news without exaggerating its effect.

Even Peston did not see the crash coming, however. Should City editors and economics correspondents have predicted it?

Alex Brummer, the Daily Mail's experienced City editor, believes they should have done. He argues that, although City journalists covered the problems of some individual companies creditably, few grasped the enormity, or scale, of the situation.

'They were slow off the mark originally,' he says, pointing out that young journalists who weren't working during the last financial crisis in the 1970s did not have the foresight to realise that a problem at one institution can quickly become a problem for all. 'That has something to do with the age profile. They've been brought up in a period of non-stop output and growth. I cut my teeth as a financial journalist in the white heat of the 1976 financial crisis, when 25 banks went under. Having lived through all of that you learned a [crisis] spreads from one institution to another and [governments] need to do something very quickly to stabilise the system.'

Brummer's historical perspective is something only a few share. Jeff Randall, a business journalist and the Daily Telegraph's editor-at-large, has been warning about personal debt and an unsustainable housing boom for years, and others have voiced similar concerns. Yet few identified the sub-prime market, or the credit crunch, as triggers that would push the world to the brink of recession, and senior figures at the FT admit they should probably have done better in that regard. Dan Bögler, the paper's managing editor, says: 'We believed the bankers when they said derivatives were making the world safer by spreading risk. But in reality it became a game of pass the parcel and the parcel ended up in the hands of those who least understood it. We take our share of the blame for that.

'Why didn't we spot it? Unfortunately, financial journalists - and the FT has better-trained financial journalists than others - don't really understand this stuff, and they join a long list of people that starts with bank regulators, central bank regulators and money managers.'

Marjorie Scardino, CEO of the paper's owner, Pearson, berated the paper for failing to uncover wrongdoing at Enron; Bögler says that was unfair. 'That was fraud. Enron was hiding stuff from everyone.' This time Scardino has stayed silent, but some of the criticism aimed at the financial press may be justified.

Bögler adds that there were dissenting voices, including some on the FT. Gillian Tett, its capital markets editor, had been warning about the credit markets for 'at least a year' before the crisis, he points out, and the paper's influential Lex column wrote regularly about over-priced assets. Martin Dickson, the FT's deputy editor, points out that 'no one in the media - or indeed banking and government - may have anticipated the full depths of this crisis, but FT readers were warned long in advance about the serious imbalances in the financial system. Tett was ringing alarm bells months before the rest of the press caught up'.

Bögler claims that since the financial system began to unravel, its coverage has been peerless, and rivals generally agree. Brummer admires Tett's coverage. 'She has got to grips with some of the technical stuff, the mechanical background.'

The Sun's business editor, Ian King, who will shortly move to the Times, says: 'I think the coverage has been absolutely terrific. On papers like our own it's a particular challenge because financial news is often baffling for the lay reader.' He points out that eight out of 10 City analysts were still issuing 'buy' notes on Northern Rock the day before it collapsed, and only one was recommending their clients sell shares in the bank. 'Experts didn't see it coming.'

King has had triumphs of his own, calling for co-ordinated interest rate cuts to avert a depression the day before central banks around the world did just that, but he points out that the global nature of the crisis, and the fact markets are always open somewhere in the world, has presented news organisations with a problem and an opportunity.

The printed products have often looked out of date by the time they hit the streets, but websites have come into their own. The FT's Dickson points out: 'The credit crisis has given a tremendous boost to our circulation and our website viewing figures. We have seen double-digit jumps in global retail sales in recent weeks while FT.com page views have risen by 300 per cent and unique users by 250 per cent. Why? We are a global newspaper and this is a global crisis.'

In the mainstream press, business journalists are enjoying their moment in the spotlight, but there is also an acceptance that too many are obsessed with the day-to-day grind of financial reporting, obsessing about corporate takeovers or reporting company results.

As the only voices within papers explaining the financial world to colleagues who don't understand it, City editors can also become unwitting cheerleaders for the Square Mile.

Brummer says that too many financial journalists are bamboozled by the 'manipulative' PR operations of big companies, and some are too fearful that they will lose access if they are too critical. 'The duty of a journalist is always to be sceptical. But they are up against very powerful institutions who lie and cheat.'

· This article was amended on October 19 2008. The deputy editor of the Financial Times is Martin Dickson, not Dixon. This has been corrected.